The option allows Hiller to purchase the shares at $6. Key Tronic stock closed on the NASDAQ national over-the-counter market Tuesday at $10.25, a price that would net Hiller $4.25 million. However, the timing - and therefore the value - of the transaction has not been determined.

In exercising the option, Hiller is beating a March 2, 1995, deadline on the purchase of Zirkle’s stock.

“He exercised these because they were going to expire and he obviously didn’t want to lose whatever profit has been built up in these shares,” Ronald F. Klawitter, Key Tronic’s vice president of finance, said Tuesday.

Klawitter said Hiller’s exercise of the option is not an indication that he is making any moves to withdraw from the company.

“He’s still got options on 2.4 million shares,” Klawitter pointed out, “and I don’t think he expects the stock price to go down.”

Hiller has open-ended options to purchase 2,396,932 shares in Key Tronic at $4.50 per share.

This activity follows a pattern Hiller has taken in all his companies over the past 25 years.

Hiller, whose company the Hiller Group is based in Menlow Park, Calif., is a corporate turnaround artist who has successfully rescued a series of foundering companies over the past quarter century. In the process, he’s made hundreds of millions through the exercise of stock options.

Although they do take a hefty annual payment for their expenses, Hiller is fond of saying that he and the Hiller Group don’t take a dime in salary compensation from the companies in which he gets involved. Rather, he gets stock options when he enters the deal, and then is compensated to the extent he can drive the stock price up.

“So I don’t get paid a cent unless the stockholders make money,” Hiller said shortly after joining the company in 1992. “Now that’s getting back to America’s true business tradition.”

Key Tronic was founded by Zirkle in 1969 and became one of Spokane’s premier high-tech manufacturers. The computer keyboard maker’s stock price peaked at $14.63 in 1986.

But by the end of 1991, Key Tronic stock had plummeted to $2.50.

Zirkle brought in former Washington Water Power Chairman Wendell J. Satre in to keep the company from collapsing, and find a new CEO. Satre and Key Tronic’s board brought in Hiller in February 1992, giving him the stock options as his principal inducement.

Hiller has carried out a broad reorganization that included the acquisition of Honeywell Inc.’s keyboard division. The restructuring involved the closure of a Cheney manufacturing plant, and the transfer of work to a former Honeywell plant in Juarez, Mexico.

Now, Hiller says, the company is poised to make its move and return to a solid foundation of profitability.

Some financial analysts agree.

Robert E. Toomey, of PiperJaffray, recommended Key Tronic last fall as a “strong buy,” saying that “the stock should be worth $20 per share” over a two-to-three-year time frame.

If Hiller exercised all his options and hung onto the stock until it reached $15 a share, the transaction would bring him a $35 million profit.

In a news release Tuesday, the company reported that Hiller Key Tronic Partners will acquire the one million shares from LGZ Inc.

Key Tronic has filed a registration statement with the Securities and Exchange Commission for the deal, and “has not yet determined the number, timing or price of any sales of the shares being registered.”

Klawitter said no disposition of the securities can be made until the SEC issues a registration statement. He said that process takes about 40 days.